LTI cap dampens housing market
He was responding to Connells research which revealed that housing valuation numbers fell by 20% in October compared to the month before, while market activity dropped by 10% on an annual basis.
Bagshaw said: “The introduction of stricter policies designed to restrain uncontrolled growth and protect against a return to the property bubble of 2008 have tempered the housing market.
“For instance the recent loan to income cap which came into force in October seems to have had a considerable impact.
“We may see a further seasonal lull in the housing market as we approach the holiday season.
“And looking further ahead, the general election in May 2015 is also likely to bring increased caution with the prospect of policy uncertainty.”
He added that the market typically sees valuations fall by around 16% from September to October, meaning the slowdown shouldn’t be overestimated.
Remortgaging valuations decreased the most month-on-month basis by 23% from September, yet on an annual basis remortgaging dipped by just 9%.
First-time buyer valuations made up almost a third of total activity in October (30%), yet the number still stands 18% lower than the previous month and 11% lower annually.
Bagshaw added: “While Help to Buy has supported many first-time buyers to get on the property ladder, other new policies have introduced fresh limits to promote responsible lending.
“These new caps seem to have affected first time buyers and home movers the most.
“The impact of Stamp Duty on buyers is also not to be ignored.
“Though it has been a permanent feature of the housing market for a while, the prospect of a hefty tax bill is still daunting to many, especially as house prices continue to rise and push properties into higher tax brackets.”